TMI Blog2012 (11) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered for the basis of making addition. In view of these facts, we are of the view that no addition can be made on the basis of loose sheets - There is no evidence found by the Revenue in the form of extra cash, jewellery or investment outside the books - in favour of assessee. Unaccounted loan - Held that:- the assessee has obtained aggregate loan of ₹ 5,70,000/- from six parties. The assessee had submitted the copies of confirmation of account of the lenders, copy of their pass book, copy of acknowledgement of Income tax returns in case of Income tax payers, copy of 7/12 utara, copy of PAN card etc. before the A.O. and has thus discharged the initial onus cast u/s. 68. The Revenue has not placed on record any material to controvert the submissions made by the assessee - the assessee is not required to prove the source from which the lenders have acquired the money deposited with the assessee - in favour of assessee. Non deduction of TDS - Addition u/s. 40(a)(ia) - Held that:- As decided in Merilyn Shipping & Transports Versus ACIT, Range-1, Visakhapatnam the provisions of section 40(a)(ia) are applicable only to the amounts of expenditure which are payable as o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the firm or the partners the paper is unsigned. The explanation of the assessee was not found acceptable for the reason that against all the transactions/figures noted in loose papers, the partner s name was mentioned, the papers were impounded from the premises of the firm and the assessee could not substantiate by furnishing necessary details of the persons to whom, it belonged. The A.O. thus treated ₹ 1,32,57,366/- as unexplained expenditure u/s. 69C and added it to the assessee s income. Aggrieved by the action of A.O., the assessee carried the matter before CIT (A). CIT (A) upheld the addition by holding as under: 5. During the course of appellate proceedings vide written submissions the explanation given before the A.O. was repeated. Further it was stated that u/s.69C any expenditure the source of which is not explained satisfactorily can be added only if it is found recorded in books of accounts but the loose papers were not books of accounts. It was argued that the papers were not signed by any of the partners and that the presumption that the expenditure was incurred is not supported by any other evidence by the A.O. It was stated that loose papers d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh repaid and cash paid towards expenses. He placed on record at pages 32A to 35 copies of the loose sheets impounded. He submitted that the A.O. has treated the gross amount of ₹ 1,32,57,366/- as expenditure and added to the income of the assessee. He submitted that at the most the total of paid for expenses aggregating to ₹ 14,69,500/- should have been added to the income instead of ₹ 1,32,57,366/-. Without prejudice, the Ld. A.R. submitted that the A.O. has erred in not giving telescopic effect for the purpose of calculating the alleged income. 8. The Ld. D.R. on the other hand submitted that the explanation that the 4thcolumn indicates net expenses (I, e. difference of total expense minus paid for expenses) is not correct. He pointed out various instances where the net expense shown in column 4 is after adjusting the amount paid to partners. He thus relied on the order of the A.O. 9. We have heard the rival submissions and perused the material on record. The factual position is that based on the loose paper impounded during the course of survey, the A.O. had treated the total expenditure of ₹ 1,32,57,366/- as unexplained and made addition u/s.6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eved by the addition made by the A.O. the assessee carried the matter before CIT (A). 12. The submissions made by the assessee before CIT (A) were not accepted by CIT (A) as according to him the submissions made by the Accountant before A.O. that the page was only an estimate drawn by him and did not relate to the assessee was considered to be an afterthought. But since there was totaling mistake (the correct figure was ₹ 25,20,000/- instead of ₹ 34,20,000/-) he upheld the addition of ₹ 25,20,000/- but telescoped it against the addition of ₹ 1,32,57,366/- u/s. 69C. Aggrieved by the action of the CIT (A), the assessee is now in appeal before us. 13. Before us, the Ld. A.R. submitted that the paper on which certain figures were jotted down does not belong to the firm or to any partners. The Accountant of the assessee has submitted that though the notings are in the handwriting of the Accountant but it does not pertain to the firm. The Accountant had further submitted that the figures mentioned in the loose paper were neither paid nor received by the firm. The aforesaid submissions were made by the Accountant before the A.O. by letter dated 24-12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. In the case of S. P. Goyal (supra) the co-ordinate Bench of the Tribunal has held that the loose paper in itself has got no intrinsic value. When it is a mere entry on a loose sheet of paper and if the assessee claims that it was only a planning, not supported by actual cash, then there has to be circumstantial evidence to support that this entry really represent cash. 17. In the case of ACIT vs. Satyapal Wassan (supra) the co-ordinate Bench has held that a charge on the basis of document can be levied only when the document is a speaking one. The document should speak either out of itself or in the company of other material found on investigation and/or in the search. The speaking from the document should be loud, clear and unambiguous. If it is not so, then document is only a dumb document. No charge can be levied on the basis of a dumb document. 18. In the case of CIT vs. S.M. Aggarwal (supra) the Hon ble High Court has held that the only person competent to give evidence on the truthfulness of the contents of the document is the writer thereof. So, unless and until the contents of the documents are proved against a person, the possession of the document or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r book. Thus it was submitted that the assessee has proved the identity, creditworthiness and genuineness of the transactions. The assessee relied on the decision in the case of Rohini Builders 256 ITR 360 (Guj.), 220 CTR 622 (Raj.), 217 CTR 354 (Raj.) and The Ld. D.R. on the other hand relied on the order of A.O. 24. We have heard the rival submissions and perused the material on record. The factual matrix of the case is that the assessee has obtained aggregate loan of ₹ 5,70,000/- from six parties. The assessee had submitted the copies of confirmation of account of the lenders, copy of their pass book, copy of acknowledgement of Income tax returns in case of Income tax payers, copy of 7/12 utara, copy of PAN card etc. before the A.O. and has thus discharged the initial onus cast u/s. 68. The Revenue has not placed on record any material to controvert the submissions made by the assessee. 25. In the case of 220 CTR 622 (Raj.) Hon ble Rajasthan High Court in the case of Aravali Trading Co. vs. ITO has concluded as under: Assessing Officer is not permitted to examine the source of the source once the assessee is able to establish that the transaction with his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder, it is seen that the A.O. furnished a chart showing interalia, the names of party, amount paid and date of payment/credit. Since the information with respect to date of payment and credit is clubbed together, it is not known whether the amount represents the amount paid or amount credited. Further, if the amount is credited, then what is the amount outstanding as on the balance sheet date. We therefore, feel that this aspect needs verification and accordingly remit the matter to the file of A.O. for verification and with a direction to verify the payments and allow the deduction considering the decision of Spl. Bench in the case of Merilyn Shipping Transporters wherein it has been held as under:- The provisions of section 40(a)(ia) of the Act are applicable only to the amounts of expenditure which are payable as on the date 31st March of every year and it cannot be invoked to disallow which had been actually paid during the previous year, without deduction of TDS. Thus this ground of the assessee is allowed for statistical purposes. Ground No.5 relates to charging of interest u/s 234A. 31. The assessment order reveals that the assessee filed its retur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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